We examine the importance of production risks in agriculture due to biotic elements such as pests in determining the pattern of trade and the distribution of prices in a Ricardian two-country setup. These elements create biodiversity eff ects that result in an incomplete specialization at the...

Production risks in agriculture due to biotic elements such as pests create biodiversity effects that impede productivity. Pesticides reduce these effects but are damaging for the environment and human health. When regulating farming practices, governments weigh these side-effects against the...